Your Councillors


COUNCIL

12 December 2018

 

Medium Term Financial Strategy 2019/20 – 2023/24

 

Final Decision-Maker

Council

Lead Head of Service/Lead Director

Director of Finance and Business Improvement

Lead Officer and Report Author

Director of Finance and Business Improvement

Classification

Public

Wards affected

All

 

 

Executive Summary

This report sets out a new Medium Term Financial Strategy (MTFS) for the Council.  The MTFS describes in financial terms how the Council will deliver its Strategic Plan over the next five years, and is therefore presented to Members alongside the proposed new Strategic Plan.

 

 

This report makes the following recommendations to Council:

That the Medium Term Financial Strategy 2019/20 – 2023/24, as set out in Appendix A, is adopted.

 

 

Timetable

Meeting

Date

Policy and Resources Committee

28 November 2018

Council

12 December 2018



Medium Term Financial Strategy 2019/20 – 2023/24

 

 

1.    INTRODUCTION AND BACKGROUND

 

1.1     The Medium Term Financial Strategy (MTFS) sets out in financial terms how the Council will deliver its Strategic Plan over the next five years.  The Council has been developing a new Strategic Plan, intended to take the place of the existing 2015-2020 Strategic Plan.  Accordingly, development of a new MTFS has taken place in parallel with development of the new Strategic Plan.

 

1.2     The purpose of the MTFS is to describe how the outcomes associated with strategic objectives can be delivered, given the financial resources available to the Council, and bearing in mind the prioritisation of objectives. ‘Financial resources’ include both revenue resources, for day-to-day expenditure, and capital resources, for one-off investment that will deliver benefits over more than a year.

 

1.3     Financial resources are described in section 4 of the MTFS, attached to this report as Appendix A.  It will be seen that there are constraints on the funding available and there are service pressures which must be accommodated.  This implies a process of matching resources against the objectives in the Strategic Plan.

 

1.4     There is also considerable uncertainty over the Council’s funding position after 2020.  Accordingly, financial projections have been prepared covering the five year MTFS period, based on three different scenarios – favourable, neutral and adverse.  Section 5 of the MTFS summarises these and shows that in both the neutral and adverse scenarios there is a significant budget gap from 2020/21 onwards, as shown below.

 

 

19/20

20/21

21/22

22/23

23/24

 

£m

£m

£m

£m

£m

 

 

 

 

 

 

Scenario 1 – Favourable

 

 

 

 

 

Budget surplus

-0.8

-0.9

-1.6

-3.3

-4.8

 

 

 

 

 

 

Scenario 2 – Neutral

 

 

 

 

 

Budget gap

0.1

1.1

1.7

1.5

1.7

 

 

 

 

 

 

Scenario 3 – Adverse

 

 

 

 

 

Budget gap

0.7

2.4

3.9

4.7

6.1

  

1.5     These figures assume that all existing agreed savings are delivered.  The MTFS highlights risks with delivering some of these savings, which mean that alternative budget proposals may need to be developed to compensate.

 

1.6     In order to inform the process of matching available resources to strategic objectives, the MTFS sets out current spending plans in section 6.  It then goes on in section 7 to set out principles for developing budget savings and growth plans.  It is proposed that spending to deliver strategic priorities is considered in relation to existing discretionary spend and the Council’s statutory responsibilities. 

 

1.7     Policy and Resources Committee agreed the approach to development of the Medium Term Financial Strategy for 2019/20 - 2023/24 at its meeting on 27 June 2018.  Members noted that existing projections assumed annual Council Tax increases up to the level of the referendum limit, but a request was also made for the impact of a Council Tax freeze to be modelled.  The MTFS addresses this point in section 5.

 

 

2.        AVAILABLE OPTIONS

 

2.1     Adopt the MTFS attached at Appendix A.

2.2     Adopt the MTFS, subject to any amendments that Council may agree.

 

2.3     Not adopt the MTFS.

 

 

3.        PREFERRED OPTION AND REASONS FOR RECOMMENDATION

 

3.1     Council is asked to adopt of the MTFS.  Without an agreed MTFS, the Council will have no formal framework for consideration of next year’s budget, and will therefore risk not being able to meet its statutory responsibility to set a budget.

 

 

4.        RISK

 

4.1     In order to address the risks associated with the MTFS, the Council has developed a budget risk register.  This seeks to capture all known budget risks and to present them in a readily comprehensible way.  The budget risk register is updated regularly and is reviewed by the Audit, Governance and Standards Committee at each meeting. 

 

 

5.       CONSULTATION RESULTS AND PREVIOUS COMMITTEE FEEDBACK

 

5.1     Consultation with all relevant stakeholders is an important part of the process of developing the MTFS.  Specifically, the consultation that is taking place as part of Strategic Plan development will elicit views on budget priorities.

5.2     The draft Medium Term Financial Strategy was considered by the Policy and Resources Committee at its meeting of 28 November 2018, along with the new draft Strategic Plan. The Committee resolved to recommend that Council adopts the Medium Term Financial Strategy.

 

 

6.       NEXT STEPS: COMMUNICATION AND IMPLEMENTATION OF THE DECISION

 

6.1     The timetable for developing the Medium Term Financial Strategy and budget for 2019/20 is set out below.

 

Date

Meeting

Action

27 June 2018

Policy and Resources Committee

Agree approach to development of MTFS and key assumptions

November 2018

All Service Committees

Service Committee consultation on MTFS

November 2018

-

Develop detailed budget proposals for 2019/20

28 November 2018

Policy and Resources Committee

Agree MTFS for submission to Council

12 December 2018

Council

Approve MTFS

January 2019

All Service Committees

Consider 19/20 budget proposals

13 February 2019

Policy and Resources Committee

Agree 19/20 budget proposals for recommendation to Council

27 February 2019

Council

Approve 19/20 budget

 

 

 

7.       CROSS-CUTTING ISSUES AND IMPLICATIONS

 

 

Issue

Implications

Sign-off

Impact on Corporate Priorities

The Medium Term Financial Strategy and the budget are a re-statement in financial terms of the priorities set out in the strategic plan. They reflect the Council’s decisions on the allocation of resources to all objectives of the strategic plan.

Section 151 Officer & Finance Team

Risk Management

This has been addressed in section 4 of the report.

Section 151 Officer & Finance Team

Financial

The budget strategy and the MTFS impact upon all activities of the Council. The future availability of resources to address specific issues is planned through this process. It is important that Council gives consideration to the strategic financial consequences of the recommendations in this report.

Section 151 Officer & Finance Team

Staffing

The process of developing the budget strategy will identify the level of resources available for staffing over the medium term.

Section 151 Officer & Finance Team

Legal

Under Section 151 of the Local Government Act 1972 (LGA 1972) the Section 151 Officer has statutory duties in relation to the financial administration and stewardship of the authority, including securing effective arrangements for treasury management.  The Medium Term Financial Strategy demonstrates the Council’s commitment to fulfilling it’s duties under the Act. The Council has a statutory obligation to set a balanced budget and development of the MTFS and the strategic revenue projection in the ways set out in this report supports achievement of a balanced budget.

Team Leader (Corporate Governance), MKLS

Equalities

The overall approach to the MTFS is to direct resources into areas of need as identified in the Council’s strategic  priorities.  The equalities impact of individual budget decisions will be determined when setting the budget.

Section 151 Officer & Finance Team

Crime and Disorder

The resources to achieve the Council’s objectives are allocated through the development of the Medium term Financial Strategy.

Section 151 Officer & Finance Team

Procurement

The resources to achieve the Council’s objectives are allocated through the development of the Medium Term Financial Strategy.

Section 151 Officer & Finance Team

 

8.        REPORT APPENDICES

 

The following documents are to be published with this report and form part of the report:

·         Appendix A: Medium Term Financial Strategy 2019/20 – 2023/24

·         Appendix B: Agreed Budget Savings 2018/19 – 2022/23

·         Appendix C: Strategic Revenue Projections 2019/20 – 2023/24 – under different scenarios

 

 

9.        BACKGROUND PAPERS

 

None.

 

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